CLASS-XII, ACCOUNTANCY

FUNDAMENTAL PARTNERSHIP

1. A partner advances Rs 50,000 loan to his firm on 1st October, then interest on his loan in the absence of deed for
31st December will be:
(a)Rs 300 (b) Rs 750 (c) Rs 600 (d)Rs 900
2. Interest on drawings for the firm, is:
(a) Income (b) Expenditure (c) Loss (d) None of these
3. Which of the following items is included in the Profit and Loss Appropriation Account of a partnership firm?
(a) Interest on Capital (b) Salaries or Commission to Partner
(c) Interest on Drawings (d) All of the above
4. Which of the following items is not included in Partners' Capital Accounts?
(a) Interest on Partners' Capital (b) Interest on Loan by Partners
(c) Interest on Partners' Drawings (d) Salaries to Partners
5. P and Q are partners sharing profits in 3: 2 ratio, having fixed capitals Rs 4,00,000 and Rs 2,00,000 respectively.
Interest on capital is to be provided @8% p.a. Firm had a profit of Rs 30,000 in the year 2017. As per Partnership
deed, interest on capital is charge on profits, The amount of interest on capital will be:
(a) P Rs 32,000; Q Rs 16,000 (b) P Rs 20,000; Q Rs 10,000 (c) P Rs 31,200; Q Rs 20,800 (d) None of these
6. A and B are partners sharing profits in 7:3 ratio, having fixed capitals Rs 2,00,000 and Rs 1,00,000 respectively.
After closing books for the year 2018, the accountant realised that interest on capital is provided @12% p.a.
instead of @ 10%. The amount of adjustment entry will be:
(a)Rs 200 (b) Rs 600 (c) Rs 400 (d) None of these
7. A and B are partners sharing profits in 2 : 3 ratio, having fixed capitals of Rs 3,00,000 and Rs 2,00,000 respectively.
After closing of books for the year 2018, the clerk realised that interest on capital was provided @ 6% p.a. instead
of 8%. The amount of adjustment entry will be:
(a) Rs 2,000 (b) Rs 6,000 (c) Rs 4,000 (d) None of these
8. X, Y and Z are partners sharing profit in 6:4:1 ratio. X guaranteed Z of minimum profit of Rs 15,000. Firm had profit
of Rs 99,000. X's share in profit:
(a) Rs 15,000 (b) Rs 30,000 (c) Rs 45,000 (d) Rs 48,000
9. Amit and Rohit are partners sharing profit in the ratio of 1:2. Kaveri was the manager who received salary of Rs
12,000 p.m. in addition to commission of 10% on net profit after charging such commission. Total remuneration to
Kaveri amounted to Rs 2,04,000. Profit for the year before charging salary and commission was:
(a) Rs 8,20,000 (b)Rs 7,80,000 (c)Rs 6,60,000 (d) Rs 8,04,000
10. Assertion (A): Interest @6% p.a. is to be allowed on loans/advances provided by a partner to the partnership firm
in the absence of a partnership deed.
Reason (R): Partnership deed always prescribes interest @6% p.a. on loans and advances provided by a partner.
11. Assertion (A): Profit and Loss Appropriation Account is prepared to show the distribution of net profit among the
partners.
Reason (R): Profit and Loss Appropriation Account is an extension of Profit and Loss Account.
12. Assertion (A) : Under fixed capital accounts method, the original amount brought in by the partners as remain
constant or unchanged unless additional capital is introduced or capital withdrawals are made.
Reason (R) : Under fixed capital accounts method, Partners' Capital Accounts and Partners' Current Accounts are
maintained.
13. Assertion (A): Partners' Current Accounts may have a credit or debit balance.
Reason (R): In partners' Current accounts, only amount invested by the partner and the permanent withdrawals
of capitals are recorded.
14. Assertion (A): Partners are never entitled for any salary, commission, or any other remuneration.
Reason (R) : In the absence of a partnership deed, the relevant provisions of the 000 opIndian partnership Act,
1932 will be applicable.

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15. A, B and C are partners in a firm. After the accounts of partnership have been drawn up and the books closed off, it
is discovered that for the years ended 31st March 2022 and 2023, interest has been allowed to the partners upon
their Capitals @ 6% p.a. although there is no provision for interest in the partnership deed. Their fixed capitals on
which interest was calculated were Rs 1,00,000; Rs 80,000 and Rs 60,000 respectively.
During the last two years, they have shared the profits as follows:-
2022 3:2:1
2023 5:3:2
You are required to give necessary adjusting entry on 1st April, 2023.
16. Kashika, Rohan and Aditya are partners in a firm. They contributed Rs 75,000 each as capital three years ago. At
that time Aditya agreed to look after the business as Kashika and Rohan were busy. The profits for the past three
years were Rs 22,500, Rs 37,500 and Rs 75,000 respectively. While going through the books of accounts, Kashika
noticed that the profit had been distributed in the ratio of 1:1:2. When she enquired from Aditya about this. Aditya
answered that since he looked after the business he should get more profit. Kashika disagreed and it w decided to
distribute profit equally retrospectively for the last three years.
(a) You are required to make necessary corrections in the books of accounts of Kashika, Rohan and Aditya by
passing an adjustment entry.
(6) Identify the value which was not practiced by Aditya while distributing profits.
17. P, Q and R are partners in a firm who share profits in the ratio 2:1:1. After closing the accounts of the firm on 31st
March, 2023 it was found that the under mentioned transactions as provided in the partnership deed were not
passed through the books of accounts:
(i) Interest @ 10% p.a. on partners capitals of P Rs 60,000; Q Rs 40,000: R Rs 50,000
(ii) Interest on drawings: P Rs 1,000, Q Rs 1,000 and R Rs 2,000.
(iii) Salary of Rs 6,000 to Q and commission Rs 7,000 to R.
Give journal entry in the beginning of next year, in the books of the firm for the adjustment of above transactions,
assuming capitals are fixed.
18. Manvi and Sudha were partners in a firm sharing profits equally. Their fixed capitals were Rs 50,000 and Rs 25,000
respectively. The partnership deed provided interest on capital at the rate of 12% per annum. For the year ended
31st March 2020, the profits of the firm were distributed without providing interest on capital.
Pass necessary adjustment entry to rectify the error.
19. Jyoti , Komal, Lipu and Miki are partners sharing profits equally. Their capital accounts stood as: Jyoti Rs 20,000;
Komal Rs 25,000: Lipu Rs 35,000; Miki Rs 55,000. After the accounts were prepared it was discovered that interest
on capital at 10% as provided in the partnership deed has not been credited to the Partners' Capital Accounts
before distributing profits. Pass adjustment entry to give effect to the above and save trouble of altering already
closed accounts. Support your answer with clear workings.
20. Subhash and Vikas started a partnership firm on 1st April, 2022 with capitals of Rs 10,000 and Rs 5,000
respectively. They agree to share profits in capital ratio and closed their accounts on 31st March, 2023. Calculate
their capital ratio and interest on capital @ 5% p.a.
Date Capital Introduced Capital Withdrawn
Subhash Vikas Subhash Vikas
1st June, 2022 ______ 5,000 2,500 _______
1st September, 2022 11,500 ______ _________ 2,000
1st December, 2022 __________ 3,000 2,000 _________
1st February, 2023 ______ 1,500 500 _______
21. On March 31, 2022 the capital accounts of Anisha, Monu and Bhumika after making adjustments for profits,
drawings, etc. were as, Anisha – Rs 80,000; Monu-Rs 60,000; and Bhumika -Rs 40,000. Subsequently, it was
discovered that interest on capital and interest on drawings had been omitted. The partners were entitled to
interest on capital @5% p.a. The drawings during the year were: Anisha - Rs 20,000; Monu –Rs 15,000; and
Bhumika -Rs 500; Monu – Rs 9,000. Interest on drawings chargeable to the partners was Anisha –Rs 500; Monu
_Rs 360 and Bhumika – Rs 200. The net profit for the year ended 31st March, 2022 amounted to Rs 1,20,000. The
profit sharing ratio of the partners was 3:2:1.

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 Record the necessary adjustment entry for rectifying the above errors of omission. Show your workings.
22. Amrit and Sumit are partners in a firm sharing profits in the ratio 2:3. Their capital accounts as on April 1, 2022
showed balances of Rs 70,000 and Rs 60,000 respectively. The drawings of Amrit and Sumit during the year 2022-
23 were Rs 16,000 and Rs 12,000 respectively. Both the amounts were withdrawn on 1st January 2023. It was
subsequently found that the following items had been omitted while preparing the final accounts for the year
ended 31st march 2023.
(a) Interest on capitals @6% p.a.;
(b) Interest on drawings @ 6% p.a.;
(c) Amrit was entitled to a commission of ₹4,000 for the whole year.
Showing your workings clearly pass a rectifying entry in the books of the firm.
23. Nitin, Arab and Kuna were partners sharing profit and losses in the proportion of 2:2:1 respectively. The Balance
Sheet of their firm as at 31st March, 2023, stood as follows:
Liabilities Rs Assets Rs
Capital accounts: Stock 12,500
Nitin 12,500 Machinery 17,500
Arab 15,000 Motor van 4,000
Kuna 20,000 47,500 Buildings 22,500
Creditors 10,000 Bank 1,250
Bills Payable 2,000 Debtors 8,000
General Reserve 6,000 Less: Provision 7,750
for Doubtful Debts 250
65,500 65,500
Arab retires on 1st April, 2023, subject to the following adjustments:
(a) Provision for bad and doubtful debts to be increased by Rs 975
(b) Stock to be appreciated by 20% and Building by 10%.
(c) Machinery to be depreciated by 10% and Motor Van by 15%.
(d) Goodwill of the firm to be valued at Rs 9,000.
(e) The capitals of the continuing partners are to be adjusted according to the new profit sharing ratio which is
agreed between Nitin and Kuna as 3:2 respectively.
Excess or shortfall in Nitin 's and Kuna's Capital Accounts to be transferred to their respective Current Accounts.
24. Ajay and Bitu started a partnership firm on 1st April, 2022 with the capitals of Rs 20,000 and Rs 10,000
respectively. They agree to share profits in capital ratio and closed their accounts on 31st March, 2023. Calculate
their Capital ratio and interest on capital @4% per annum.
Date Capital Introduced Capital Withdrawn
Ajay Bitu Ajay Bitu
1st June, 2022 ______ 10,000 5,000 _______
1st September, 2022 23,000 ______ _________ 4,000
1st December, 2022 __________ 6,000 4,000 _________
1st February, 2023 ______ 3,000 1,000 _______

25. A, B and C were partners. Their capitals were Rs 30,000; Rs 20,000 and Rs 10,000 respectively on 1st April, 2022.
According to the partnership deed they were entitled to an interest on capital at 5% p.a. In addition B was also
entitled to draw a salary of Rs 500 per month. C was entitled to a commission of 5% on the profits after charging
the interest on capital, but before charging the salary payable to B. The net profits for the year ended 31st March,
2023 were Rs 30,000, distributed in the ratio of their capitals without providing for any of the above adjustments.
The profits were to be shared in the ratio of 2:2: 1. Pass the necessary adjustment entry showing the workings
clearly.

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